Tk238 Billion in Two and a Half Months

In the first two and a half months of fiscal 2026-27, the Finance Division disbursed Tk238 billion in power and LNG subsidies. The full-year allocation is Tk480 billion. That is 49.6 percent of the annual subsidy budget spent before October, and the LNG line is nearly exhausted: Tk100 billion of Tk110 billion was disbursed in July and August alone, leaving Tk10 billion for the remaining ten months of the fiscal year.

This is the number that will sit on the table when Finance Minister Amir Khosru Mahmud Chowdhury meets IMF officials on the sidelines of the IMF-World Bank annual meetings in Thailand in the second week of October. The previous $5.5 billion IMF programme was scrapped by the current government after $3.595 billion had been released. The new one is expected to land between $4.0 billion and $4.5 billion. The subsidy burn is the negotiating pressure point, and it is entirely arithmetic: at the current pace, the annual bill reaches roughly Tk1.14 trillion against a Tk480 billion budget.

Arithmetic of exhaustion

The breakdown, from the Financial Express's Finance Division reporting, shows where the money went. The budget earmarked Tk370 billion for power-sector subsidies and Tk110 billion for LNG. Power disbursements ran Tk90 billion in July and August, then another Tk48 billion on September 20, taking the power total to Tk138 billion, about 37 percent of its line. LNG ran far hotter: Tk100 billion disbursed in the first two months, 91 percent of its annual provision, against unusually high international prices. The government has been buying spot LNG at nearly $30 per MMBtu, around three times the pre-Middle East conflict level, and a senior Finance Division official told the Express the subsidy requirement "will increase manifold this fiscal year if the present trend of LNG prices continues."

The pace is the story. Tk238 billion in two and a half months annualizes to about Tk1.14 trillion, nearly two and a half times the budgeted Tk480 billion. That is derived arithmetic, not a forecast: it assumes the burn rate holds, and the burn rate is driven by spot LNG prices that nobody in Dhaka controls. The observable that would prove this wrong is the monthly disbursement print dropping back toward the budgeted Tk40 billion a month. Watch for it in the Finance Division's monthly releases.

What IMF will demand

The Fund has already said what it wants. A July fact-finding mission led by mission chief Ivo Krznar recommended that the government devise a mechanism to restrict subsidy benefits to poor households while affluent consumers pay market rates for power and energy. A senior Finance Division official put the negotiating reality bluntly to the Financial Express: "The IMF wouldn't accept continuation of such a big subsidy spending under the new credit programme as rich people are also benefited from the same." The same reporting says IMF officials will push the authorities to stop energy and power subsidies at current levels and to raise electricity and fuel-oil prices further.

The calendar is fixed. Finance ministry officials say preliminary discussions begin in Thailand in October, an IMF team visits Dhaka in late October or early November, and, subject to satisfactory progress, the proposal goes before the IMF Executive Board in January. The current fiscal year's budget was already aligned with IMF reform parameters, including a tax-to-GDP ratio of 9.2 percent and a deficit ceiling below 4 percent of GDP. The subsidy line is the one input that has blown past its parameters before negotiations even start, which is what makes it the pressure point rather than just a line item.

That is inference with a short fuse: if the October meetings produce a staff-level understanding that keeps subsidies near current levels, the pressure-point read is wrong and this piece says so. If the meetings produce a prior action on tariff adjustment, the arithmetic above is the reason.

External position rebuilds on thinning flows

The other side of the ledger is moving in the opposite direction. Gross foreign exchange reserves stood at $36.31 billion on September 20, with $31.45 billion under the IMF's BPM6 methodology, per Bangladesh Bank data carried by BSS. Remittances, the flow rebuilding those reserves, are losing momentum: $2.196 billion arrived in the first 23 days of September, up only 1.5 percent year on year, against a fiscal-year-to-date figure of $8.022 billion that is still up 13.6 percent. The September pace is decelerating while the fiscal burn is accelerating. That divergence is the classic IMF-precondition setup: external stability bought with inflows that are thinning, fiscal strain driven by outflows that are not.

Bangladesh Bank is holding its side of the line. The Monetary Policy Committee kept the policy rate at 9.50 percent on September 23 and, per the Financial Express, does not intend to cut until December, citing the fuel-price revision and reserve-money growth as inflation risks. Headline inflation was 8.26 percent in August, down from 8.32 percent in July, against a fiscal-year target of 7.5 percent and a 12-month moving average of 8.66 percent. The September fuel-price revision, Tk20 a litre across the board on September 21, is the September CPI watch item: if it pushes the print back up, the rate hold extends and the fiscal-monetary squeeze tightens from both sides.

What to watch

Three observables, stated so they can be proven wrong. First, the October Thailand meetings: any staff-level signal on whether the subsidy pace is a prior action or a programme condition. Second, the monthly Finance Division disbursement print: back toward Tk40 billion a month means the arithmetic is closing; sustained above Tk80 billion means a supplementary allocation or tariff adjustment is unavoidable before the January board date. Third, the September CPI print: the fuel-price pass-through decides whether Bangladesh Bank's December hold becomes a longer freeze, which decides how much fiscal room the government has left to maneuver.

The Middle East conflict is the exogenous variable in all of this. Spot LNG at $30 per MMBtu is not a policy choice. If it de-escalates, the burn rate falls and the government gets breathing room it has not earned. If it does not, the Tk10 billion left in the LNG line runs out in weeks, not months, and the next decision is not whether to adjust tariffs but how fast.